Reverse Mortgage Originators Tackle Ways to Improve Servicing

Reverse mortgage lenders and originators have made great strides in improving the product’s image over the last decade. But once the borrower signs the loan documents, his or her fate — and the loan’s reputation — is fully in the hands of the servicer.

Although all lenders interviewed for this article expressed satisfaction with the upper management of the servicing companies, they said they wish there was more training and education for the employees who interact directly with borrowers and their families. This, in an effort to cut down on misinformation unanswered, or family members having trouble getting resolutions after the borrower dies or moves, they said. Many times the difficulties surface at the time the loan is called due and payable.

Melinda Hipp, branch manager with Open Mortgage, LLC in San Antonio, Texas, agrees that more training and education at the call center level would benefit everyone.

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Hipp said that she has had borrowers’ spouses call and tell her that servicers erroneously informed them that they needed to quickly move out of their homes, or that the servicer would not give them any information because they were not listed as the point of contact on the reverse mortgage.

“It’s not the program, it’s not the up-front costs. The bad rap comes from the stories people hear about what happens in the end,” she said.

It’s these errors in the servicing world that worry Karen Rayfield, a loan officer with Retirement Funding Solutions in Virginia Beach, Va. For these servicers, Rayfield said she would like to see more oversight from the U.S. Department of Housing and Urban Development and possibly the Consumer Financial Protection Bureau.

“Someone needs to say enough is enough,” she said. “There has to be some way for complaints to be resolved, and there needs to be a timely resolution. Servicing is a very critical piece of the whole puzzle and it has to be done well.”

Although not typically part of an originator’s job description, Harlan Accola said he goes out of his way to help his clients with any servicing issues that may arise. Accola, national director for reverse mortgages at Madison, Wis.-based Fairway Independent Mortgage Corporation, said either he or his assistant becomes an approved point of contact on these loans, so that they can call the servicer with the borrower or on the borrower’s behalf.

“It’s everybody’s job to make the industry look good,” Accola said. “We can’t fix the whole world, but we can at least fix this. It’s all of our jobs to be ambassadors.”

As for communication between the servicer and originator, Hipp wants the servicing companies to instruct originators on how to handle the servicing questions clients commonly ask them.

“I’ve said, ‘Let’s have a servicing seminar, and before we talk we’ll have originators send in questions they’ve been asked by clients, and then you can tell us how to help them,’” Hipp said. “If we can have dialogue between the front end and the back end to help person in middle, it would be really, really good,” she said.

Hipp said that a more proactive partnership between the servicer and the borrower would lessen some of the other common problems.

“Simple reminders from the servicer to the borrower about what will happen in the event of death or relocation would keep the borrower safer in the end,” Hipp said.

Written by Maggie Callahan

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  • This article is directly addressing the most pressing post-closing flaw in the entire program.

    The servicers:

    As a Clinton campaign manager famously once said: “It’s the economy, stupid,” For the borrowers In the HECM world: “It’s the atrocious servicing incompetence, stupid.”

    This problem with servicing is not only deeply-embedded and systemic, but it reaches down to the level of routine bungling of “routine paperwork.”

    For example: A borrower will comply with a “repair set-aside” that’s mandated by the lender and enforced by the servicer through terse “notices.”

    After the borrower has sent the servicer all necessary paperwork (“contractor lien waiver;” “paid in full invoice,” etc.), all signed and dated by both the contractor and the borrower upon completion of the repair in question, the servicer will inevitably claim that something is missing.

    After a couple of months of repeatedly sending-in duplicate documentation (where one piece of documentation is sent-in, again, only to be informed that yet another piece that was already confirmed to be in their possession, has now gone-missing; repeat, rinse ‘n dry), it’s proved that nothing was missing at all, in the first place).

    This sort of gross incompetence isn’t limited to “written communication,” but carried over to telephone conversations with customer service, it gets even worse. Customer service is unbelievably useless. A borrower can’t “straighten things-out” even by “talking to a person.” Made worse by a certain, let’s call it, “bureaucracy syndrome,” which is: there is no accountability to ensure well-performing customer service employees. The borrower is not a customer who can “go somewhere else” if they don’t like the service; they’re stuck and the customer service representatives well know it. They’re the rudest people to try to deal with on earth. Question anything, and they actually yell at and try to browbeat the borrowers. Their attitude is that they’re never, ever wrong, period.

    The scary part:
    What if this gross incompetence happens with regard to tax payments?
    What if, by some screw-up by the servicer, they think a borrower missed a property tax payment? Well, repeat the nightmare above, only with a greatly elevated, negative consequence.

    The originators:

    Yes, this is the only recourse that borrowers have to just get simple matters of paperwork done. And “simple matters of paperwork” isn’t to be confused with something of small consequence: if a borrowers repair set-aside obligation isn’t resolved, the borrowers’-end of the HECM agreement isn’t completed.

    Quote from the article:
    “Although not typically part of an originator’s job description, Harlan Accola said he goes out of his way to help his clients with any servicing issues that may arise. Accola, national director for reverse mortgages at Madison, Wis.-based Fairway Independent Mortgage Corporation, said either he or his assistant becomes an approved point of contact on these loans, so that they can call the servicer with the borrower or on the borrower’s behalf.”

    Well, it’s the originator who put-you-with the particular servicer, if they suggested the servicer. So, it may not be part of the originators’ job description, but it’s part of the description of: “acting in good faith.”

    Quote from the article:
    “As for communication between the servicer and originator, Hipp wants the servicing companies to instruct originators on how to handle the servicing questions clients commonly ask them.”

    I’m going to have to disagree with this approach. How convenient for the servicer, that already has everything “their own way;” that’s the root of the problem: the servicers have zero accountability, and the individual quoted from the article wants the servicers to in effect muffle borrowers’ complaints for them?

    No, it’s the originators who should complain to the servicer about how bad the servicers’ servicing really is. However, the originators are likely to have their “compensation deal” with the servicer (slightly indirectly through the lender; unless the lender does their own servicing). So the originator, although helping the borrower with problems with the servicer, is likely to be as nice as pie to the servicer.

    If everyone in the industry has it their own way, guess who loses in this game of musical chairs? The borrowers. Why bother pretending to be looking for a solution?

    The servicers need serious accountability. Problem solved. With all the research reports from people in academe, HECM trade organizations, congress, HUD and the FHA, etc., it hasn’t been figured-out yet that: “It’s the atrocious servicing incompetence, stupid!”

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